ITM Covered Calls

Would it be correct in saying that the only real risk in writing an ITM Covered Call is in owning the stock should the price be lower than the strike price at expiration?

According to my understanding, simplified calculations would be as follows (hypothetically)...

2300 Stock Purchase at $2.3 per share1200 Option Credit at $1.2 per contract1100 Total Debit1000 Exercise Credit at $1.0 per share0100 Profit

Assuming the call is exercised, the profit has been made. If the call should not be exercised due to a decline in the stock price below the strike price, you keep the stock at a cost of $1100 and all its associated risks.

WD, I don’t follow RAIT so I have no opinion on the
stock. You however, should, if you
are going to do this trade. You
will be at some risk for a month, after which at best you will make a 3%
profit. The question you must
answer is, “Is the risk worth it?”
In my mind A lot of the answer rests with what you think of the
underlying. Personally, I
generally try to look for larger gains, but that is my preference and need not
be yours.

It was just a discovery on the use of ITM Covered Calls that caused me some excitement and question. The profit looked good for a months return and there was fair downside protection. Some would say when annualized the 8% turns into 96%. This does not really seem reasonable though as it would not be annualized. The trade is still available as of date though for a much lesser return.

The risk at an 8% short-term (1-month) profit with 20% downside protection on a stock that has long-term upside potential seemed worthwhile. It was at $3.40 or so before the downturn. A volatile stock with a high beta that has already declined most of that beta during this said correction. For me it would have been a good trade. My funds are paralyzed anyhow presently. Again, it was just the idea of an ITM Covered Call that caught me by surprise as OTM Covered Calls are most commonly spoken of.